On 15 February 2019, the Hanoi Tax Department issued 'Official Letter No. 6351/CT-TTHT' that provides guidance on expenses for non-Vietnamese workers who aren't granted work permits.
The official letter outlines where companies hire foreign workers to perform jobs in Vietnam (but they have not been granted work permits by the competent authorities in Vietnam under the Labor Code) the salary, bonuses and other expense in nature of wages and remuneration paid by the enterprise to the employee will not have sufficient basis to be qualified as deductible expenses, when determining taxable income for CIT purpose.
Additionally, the input VAT on expenses paid by enterprises to the above-mentioned employees will not meet the requirements to be considered as creditable input VAT.
The full April 2019 tax update from Grant Thornton Vietnam is avaialable in English, Vietnamese and Japanese.
Read more insights on tax changes affecting internationally mobile employees.